An insurance company sells a $16,000, eight-year term life insurance policy to an individual for $1,620....

An insurance company sells a $16,000, eight-year term life insurance policy to an individual for $1,620. Find the expected return for the company if the probability the individual will live for the next eight years is 0.93. (Round your answer to the nearest cent.)

Expert Solution

Given,

Probability of living=0.93

Probability of death=1-0.93=0.07

Cost of policy=$1,620

If the person dies, company has to pay $16,000.

Overall loss for the company=16000-1620=$14380

If the person lives, company does not to have to pay anything, instead it gets to keep $1,620

Expected value,

Let x be the return for the company

Return for the company, x	1620	-14380
Probability, P(x)	0.93	0.07

Expected return for the company=$500

orchestra answered 2 years ago

An insurance company sells a $17,500, three-year term life insurance policy to an individual for $675....

An insurance company sells a $17,500, three-year term life insurance policy to an individual for $675. Find the expected return for the company if the probability the individual will live for the next three years is 0.99. (Round your answer to the nearest cent.)

Suppose a life insurance company sells a $290,000 a year term life insurance policy to a...

Suppose a life insurance company sells a $290,000 a year term life insurance policy to a 20-year-old female for $200. The probability that the female survives the year is 0.999634. compare and interpret the expected value of this policy to the insurance company. the expected value is $___ (round to two decimal places as needed)

A life insurance company sells a $150,000 one year term life insurance policy to a 21-year...

A life insurance company sells a $150,000 one year term life insurance policy to a 21-year old female for $150. The probability that the female survives the year is .999724. Find the expected value for the insurance company.

suppose a life insurance company sells a $240,000 one year term life insurance policy to a...

suppose a life insurance company sells a $240,000 one year term life insurance policy to a 19 year old female for $270. the probability that the female survives the year is .999522. compute and interpret the expected value if this policy to the insurance company. the expected value is $______

A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year old...

A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year old male for $350. The probability this person survives the year is 0.98734. Compute the expected value of this policy to the insurance company to the nearest 0.01.

Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a 23-year-old...

Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a 23-year-old female for $190. The probability that the female survives the year is 0.999594. Compute and interpret the expected value of this policy to the insurance company.

Suppose a life insurance company sells a $160,000 one-year term life insurance policy to a 25-year-old...

Suppose a life insurance company sells a $160,000 one-year term life insurance policy to a 25-year-old female for $280. The probability that the female survives the year is 0.9996420 Compute and interpret the expected value of this policy to the insurance company. The expected value is $nothing. (Round to two decimal places as needed.)

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 24-year-old...

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 24-year-old female for $200. The probability that the female survives the year is .999461. Compute and interpret the expected value of this policy to the insurance company.

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 20-year-old...

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 20-year-old female for $330. The probability that the female survives the year is 0.999502. Compute and interpret the expected value of this policy to the insurance company.

Suppose a life insurance company sells a $230 comma 230,000 one-year term life insurance policy to...

Suppose a life insurance company sells a $230 comma 230,000 one-year term life insurance policy to a 19-year-old female for $230. The probability that the female survives the year is 0.999588. Compute and interpret the expected value of this policy to the insurance company.

Question